Doing What's Right: The Impact of Rotation Policies on Managers' Reports about Operational Distortion

41 Pages Posted: 16 Aug 2016 Last revised: 9 Jul 2019

See all articles by Eddy Cardinaels

Eddy Cardinaels

KU Leuven; Tilburg University - Center and Faculty of Economics and Business Administration

Bart Dierynck

Tilburg University

Victor van Pelt

WHU - Otto Beisheim School of Management

Date Written: July 7, 2019

Abstract

We examine how rotation policies impact managers' reporting decisions about operational distortions to performance measurement at their business unit. The results of our laboratory experiment reveal rotation policies trigger managers to view their reporting decision less as an economic decision and more as a decision that enables them to "do what's right" for their firm. Consequently, rotating managers report more information about operational distortions while firms reward them similarly regardless of the rotation policy in place. We discuss the implications of our findings for academic research on rotation policies and for firms looking to resolve operational distortions and improve how they measure performance at business units.

Keywords: rotation, reporting, performance measurement, distortion, business units, management, information asymmetry, agency

JEL Classification: C92, M40, M41, M54

Suggested Citation

Cardinaels, Eddy and Dierynck, Bart and van Pelt, Victor, Doing What's Right: The Impact of Rotation Policies on Managers' Reports about Operational Distortion (July 7, 2019). AAA 2017 Management Accounting Section (MAS) Meeting. Available at SSRN: https://ssrn.com/abstract=2823059 or http://dx.doi.org/10.2139/ssrn.2823059

Eddy Cardinaels

KU Leuven ( email )

Naamsestraat 69
Leuven, B-3000
Belgium
+32 16326984 (Phone)

HOME PAGE: http://www.kuleuven.be/wieiswie/nl/person/00013472

Tilburg University - Center and Faculty of Economics and Business Administration ( email )

P.O. Box 90153
Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31 134668231 (Phone)

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/?uid=e.cardinaels

Bart Dierynck

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Victor Van Pelt (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
534
Abstract Views
1,833
rank
50,562
PlumX Metrics